U.S. stocks fall after reports of political turmoil in Egypt; Oil prices rise

7/2/2013

ASSOCIATED PRESS

In this Friday, June 28, 2013 photo, trader Robert Vella, left, works on the floor of the New York Stock Exchange. U.S. stocks are getting off to a slow start after a three-day rally. U.S. stock futures are rising with industry watchers expecting automakers to post banner sales. The government also releases its May factory orders report Tuesday, July 2, 2013, and economists are looking for signs of an extended recovery in manufacturing. (AP Photo/Richard Drew)

ASSOCIATED PRESS

NEW YORK — The stock market turned negative in early afternoon trading today on news reports of political turmoil in Egypt.

Stocks had traded higher most of the day on positive news about the U.S. economy. But around 1:40 p.m. Eastern Daylight time, the market dipped below Monday’s close. News emerged that Egypt’s military had drawn up plans to suspend the country’s constitution, dissolve its legislature and set up an interim government.

That development overshadowed good news about car sales, home prices and manufacturing, which led the market higher in the morning.

Crude oil moved higher after the political situation in Egypt worsened. It rose almost $1 after the news broke, trading at $99.60 a barrel. That was $1.60 above its final price the day before.

Meanwhile, Ford’s stock jumped 40 cents, or 2.5 percent, to $16.13, after it reported its best June sales since 2006.

Earlier, reports showed that U.S. factory orders rose in May, helped by a third straight month of stronger business investment. Orders rose 2.1 percent and April’s increase was revised higher to 1.3 percent from 1 percent, the Commerce Department said.

U.S. home prices jumped 12.2 percent in May from a year earlier, the most in seven years, according to real estate data provider CoreLogic. The increase suggests the housing recovery is strengthening.

Investors and traders are also turning their focus to corporate earnings, which begin in earnest next week. While corporate profits have reached record levels, most of the gains have come from cutting costs rather than increasing sales.

“We’re in the middle of a transition,” said Chris Wolfe, chief investment officer at Merrill Lynch Private Banking and Investment Group. “You would expect to see, over the balance of this year and going into next year, somewhat stronger macro-economic data that translates directly into stronger corporate revenue growth.”

Alcoa, the first company in the Dow to report its earnings, will release its second-quarter earnings report after the market closes July 8.

In government bond trading, the yield on the 10-year Treasury note dipped to 2.47 percent from 2.48 percent on Monday. The yield has stabilized after surging as high as 2.66 percent last week, on concern that the Fed was set to stop buying bonds.

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